Consider a manufacturing firm with a production process that relies on some technology that is inherently random. In particular, in each month, the productivity of the firm generates a baseline level of net revenue equal to 350 (in thousands of dollars). However, the actual net revenues generated vary due to the variation in output caused by the production technology. The variation can be represented as a risky lottery, P , with the resulting changes in net revenue (in thousands of dollars) as the listed outcomes, given by P= (.4, -50; .25, 10; .35, 50) (a) Show that the lottery is a zero-mean lottery -- that is, the expected variation in revenues is E(P)= 0.

Consider a manufacturing firm with a production process that relies on some technology that is inherently random. In particular, in each month, the productivity of the firm generates a baseline level of net revenue equal to 350 (in thousands of dollars). However, the actual net revenues generated vary due to the variation in output caused by the production technology. The variation can be represented as a risky lottery, P , with the resulting changes in net revenue (in thousands of dollars) as the listed outcomes, given by P= (.4, -50; .25, 10; .35, 50) (a) Show that the lottery is a zero-mean lottery -- that is, the expected variation in revenues is E(P)= 0.

A First Course in Probability (10th Edition)

10th Edition

ISBN:9780134753119

Author:Sheldon Ross

Publisher:Sheldon Ross

Chapter1: Combinatorial Analysis

Section: Chapter Questions

Problem 1.1P: a. How many different 7-place license plates are possible if the first 2 places are for letters and...

See similar textbooks

Similar questions

Ecologists conducted a study to investigate the potential ecological impact of golf courses. Investigators monitored the reproductive success of bluebirds in birdhouses at nine golf courses and ten similar birdhouses at nongolf sites. Data on nests in birdhouses occupied only by bluebirds are shown in the table. If the proportions of nests occupied is the same for golf and nongolf sites, what would be the expected count of birdhouse with 1 nest in nongolf locations? O nests 1 nest Total 2 or 3 nests Golf 30 42 8 80 Nongolf 40 58 22 120 Total 70 100 30 200 50 b 42 60 d. 58 e 40 O O O O O
An anger-management course claims that, after completing its seminar, participants will lose their tempers less often. Always a skeptic, you decide to test this claim. A random sample of 12 seminar participants is chosen, and these participants are asked to record the number of times that they lost their tempers in the two weeks prior to the course. After the course is over, the same participants are asked to record the number of times that they lost their tempers in the next two weeks. The following table lists the results of the survey. Using these data, test the claim at the 0.01 level of significance assuming that the population distribution of the paired differences is approximately normal. Let participants before completing the anger-management course be Population 1 and let participants after completing the anger-management course be Population 2. Number of Times Temper Was Lost during a Two-Week Period Before 10 6 8 10 6 3 10 3 8 After 6 7 4 4 8 6 4 9 3 7 Copy Data Step 2 of 3:…
A large retail lawn care dealer currently provides a 2-year warranty on all lawn mowers sold at its stores. A new employee suggested that the dealer could save money by just not offering the warranty. To evaluate this suggestion, the dealer randomly decides whether or not to offer the warranty to the next 50 customers who enter the store and express an interest in purchasing a lawnmower. Out of the 25 customers offered the warranty, 10 purchased a mower as compared to 4 of 25 not offered the warranty. a. Place a 95% confidence interval on 7₁ - 72, the difference in the proportions of customers purchasing lawnmowers with and without the warranty. b. Test the research hypothesis that offering the warranty will increase the propor- tion of customers who will purchase a mower. Use a = .05. c. Are the conditions for using a large-sample test to answer the question in part (b) satisfied? If not, apply an exact procedure,
The PR team at Bruno conducts their hiring process in two stages. For applicants who are classified as A, B, and G in the first stage, the chances of getting hired full-time after the second stage are 74%, 43% and 26% respectively. If an applicant is not hired full-time, they are either put on a probation list, or rejected. Unselected applicants of all categories (A, B, and G) are half as likely to be put on the probation list as being rejected. During the first stage of the most recent hiring, 22% of the applicants were rated A, 39% were rated B, and the rest were rated G. If a randomly chosen applicant was rejected by three out of eight individual interviewers, what is the probability that they were rated A?
A project has a 60% of super success earning $50,000, a 15% chance of mediocre success earning $20,000, and a 25% probability of failure losing $30,000. What is the EMV of the project?
A basketball coach is interested in determining if shooting free throws underhand is better than shooting them using the overhead method. He has four high school teams (two boys' teams and two girls' teams, with 13 players on each team) available to take part in an experiment. He believes that the difference in shooting percentages will vary more for boys than for girls. He randomly chooses and instructs half of the boys to continue shooting free throws overhead and the rest of the boys to shoot underhand. He does the same for the girls. At the end of a six-game summer league, he compares the shooting percentages for the overhead shooting boys to the underhand shooting boys and the overhead shooting girls to the underhand shooting girls. (a) What is the advantage of using a block design for this study? O Blocking by gender will reduce the variation in the response variable by creating homogeneous groups and determining the effect of the new shooting style on the response (percentage of…
Itranscript One male and one female dam rat pup were randomly selected from 8 litters to perform the swim maze. Each pup was placed in the water at one end of the maze and allowed to swim until it escaped at the opposite end. If the pup failed to escape after a certain period of time, it was placed at the beginning of the maze and given another chance. The experiment was repeated until each pup accomplished three successful escapes. The table to the right reports the number of swims required by each pup. Is there sufficient evidence of a difference between the mean number of swims required by male and female pups? Use a=0.01. Comment on the assumptions required for the test to be valid. B. t> Litter 1 2 3 OC. t 10 12 Female 11 [6526675 10
Many golfers wear wrist bracelets containing magnets because they claim the magnets improve balance and the length of shots played off the tee. A golfer would like to determine if the claim has merit and finds 200 volunteers who play golf to participate in an experiment. Half of the golfers are randomly assigned to wear a bracelet with magnets, while the other half wear a bracelet without magnets. Each golfer plays normally for a month, after which the length of their shots in a subsequent round is recorded. What is the response variable in this experiment? the age of each golfer the 200 volunteers the length of shots played by the golfers whether the golfers wear or do not wear the bracelet
Each year, researchers at the U.S. Bureau of Labor Statistics (BLS) administer the American Time Use Survey (ATUS). Researchers estimate the average amount of time Americans spend on daily activities, such as working, housework, and leisure activities. In particular, one activity that is of interest is the average amount of time Americans spend watching television each day.A researcher complied a random sample of 16 Americans and asked each person how much time they spent watching television each day. The results are given below. 1.9 2.3 3.9 4.4 3.2 1.5 1.2 4.4 0.9 4 0.6 3.9 4.5 1.9 1.8 3.7 Determine the point estimate, x¯ and the sample standard deviation, s. Round the solutions to four decimal places, if necessary.x¯=s=Using a 95% confidence level, determine the margin of error, EE, and a confidence interval for the average time Americans spend watching television each day. Report the confidence interval using interval notation. Round solutions to two decimal places, if…
Employees in the marketing department of a large regional restaurant chain are researching the amount of money that households in the region spend in restaurants per year. The employees are looking at how the amount spent annually in restaurants by households led by people ages 25 to 34 compares to households led by people ages 45 to 54. To conduct the research, the employees randomly select 100 households in the region led by people ages 25 to 34 and 100 households in the region led by people ages 45 to 54. Each household is asked how much was spent in restaurants during the previous 12 months. The amounts spent for each household, in dollars, are provided in the samples below. One household in each group spent $1,924 in restaurants during the previous 12 months. Use Excel to calculate the z-score for the data value that represents the household that spent $1,924 in restaurants for each group. Round your answers to two decimal places. Provide your answer below: 25 to 34 45 to 54…